Revenues down, earnings up for Entercom


Sequential improvement is the new mantra for media companies and that’s what Entercom reported for Q3 – a quarter which was down less than Q2, which in turn had been down less than Q1. So, CEO David Field is still among the most optimistic about 2010 – and he’s not backing away from his comments that double-digit percentage growth in revenues is possible.

Entercom reported that Q3 revenues were down 14% to $99.8 million – a bit worse than the 13% that had been expected by Wall Street analysts. But Field noted that was a sequential improvement over the 18% decline in Q2 and the 21% decline in Q1. Excluding political, he noted, Q3 revenues would have been down only 12%. Also, September, the final month of the quarter, was also the best, down 11% from a year ago.

But Entercom grew the bottom line, with cost savings and one time items producing earnings per share of 50 cents – well above the 12 cents of a year ago. However, adjusted net income per share (taking out those non-recurring items) was only 28 cents, down 28% from a year ago and below the 32 cents that had been the consensus of analysts surveyed by Thompson/First Call. Station operating income was down 23% to $34.2 million.

Going forward, Field assured analysts and investors that most of the cost cuts the company has made will be permanent, adding to the bottom line. And he’s optimistic about the top line. “We have seen business conditions improve over the past several weeks, most notably with national sales. And the tone of advertiser discussions continues to improve as more local and national customers are indicating that they intend to increase their spending next year. Having said that, while advertiser sentiment is improving, it does remain cautious and is evolving gradually as customers keep a watchful eye on economic conditions,” the CEO said. “For Q4 we expect another sequential improvement in Entercom’s revenues. Our Q4 numbers will be dampened by tough political comps, as political revenues were 4% of our Q4 2008 revenues. But I want to clarify here, even with political we will be sequentially better for the 4th quarter,” Field insisted.

“Now looking ahead, we are increasingly optimistic about 2010 and 2011, based upon a number of indications of recovery of demand in the ad market and in light of easy comparative results after two ugly years of cyclical economic decline. The fact is that the potential exists for very substantial revenue gains for the next couple of years as we recover from the deep decline in ad spending that has impacted all forms of media. Furthermore, we believe that radio’s strong audience listening trends and outstanding value proposition for advertisers position the medium to gain share at the expense of certain competitive media that are experiencing significant audience erosion and other troubling secular issues. The combination of economic recovery, easy comps and an improving competitive position relative to other media offer the potential for solid growth in the years ahead,” Field said.

Later, in the Q&A session, Field refused to back down from his declaration at the NAB Radio Show in Philadelphia that double digit percentage revenue growth is possible next year. The math, he said, is that radio ad revenues fell 30% over the past two years. Since it would take a 40% increase in ad revenues just to regain that lost ground. “Nobody’s suggesting that we’re going to be up 40% as a medium next year, but is it absurd to think we might be up a quarter of that or a third of that? I think that’s the potential for next year,” Field told the analysts.